Renault Argentina S.A. Business Information, Profile, and History

company million cars percent

Fray Justo Santa Maria de Oro 17Buenos Aires, C.F. C1414CWTArgentina

History of Renault Argentina S.A.

Of Argentina's ten automakers, almost all are closely held subsidiaries or affiliates of their American, European, or Japanese parent organizations. The exception is Renault Argentina S.A., which is traded on the Buenos Aires stock exchange. Once the nation's largest automobile manufacturer, this company now ranks in the middle of the pack, struggling to sell new Renaults and Nissans in a nation badly mauled by economic crisis. Through subsidiaries, Renault Argentina also is engaged in vehicle financing and insurance.

Kaiser-Frazers, Nash Ramblers, and Renaults: 1955-79

Renault Argentina had its start as Industrias Kaiser Argentina S.A.I.C.P. (IKA), a joint venture of the Kaiser-Frazer Automobile Co. and an Argentine government ministry. Like other U.S.-based independent car companies competing with the Big Three in the wake of World War II, Kaiser-Frazer led a precarious existence. In 1955, shortly before halting all passenger car production in the United States, Kaiser-Frazer invested funds and idle equipment in an Argentine motor assembly plant built in Santa Isabel, on the outskirts of Córdoba. Thousands of Argentines participated in a public offering of shares of stock, which was oversubscribed.

Production began in 1956 and peaked in 1965, when 55,269 vehicles were assembled there, or 28 percent of Argentina's total production. About a third were Kaiser-Frazer automobiles and jeeps; the other two-thirds were Nash Ramblers and (from 1960) Renaults produced under license. With 8,500 employees, IKA was the nation's largest single automobile manufacturer. In early 1967 the company rolled out a new model, the Torino, on the base of the Rambler American 440. Furnished with the first industrial-scale engine designed totally in Argentina, the Torino became a classic.

Later in 1967, French-based Regie Nationale des Usines Renault assumed control of the company by purchasing a large percentage of the shares of stock and changed its name to IKA Renault S.A.I.C.F., which was changed to Renault Argentina S.A. in 1975. IKA Renault held 19 percent of the domestic auto market in fiscal 1971-72 but was struggling to make a profit. It had to refinance its debts to European creditors in 1972, receiving a $64 million infusion. The Renault 12, launched in 1971, became the best-selling model in Argentina during the early 1970s and remained so throughout the decade. Others were the R4 (dating from 1963), and R6 (1970), the Torino, and commercial vehicles. Political instability made the 1970s a difficult decade in Argentina, but the 32,861 vehicles that the company sold in 1978 represented 22 percent of the national total. Under the Renault Argentina banner was also Filiales Industriales, a group of seven companies annually producing the equivalent of $100 million a year worth of cables, forged parts, foundry steel and aluminum, dies, and polyurethane seats.

Renault Argentina in the 1980s

Renault Argentina began the new decade doing even better. In 1980, a boom year in which the auto industry sold 250,000 cars, the company raised its share to almost 24 percent. The Renault 12 still topped all models, and the following year the company presented a new, larger version with a two-liter engine, the Renault 18. Renault Argentina was enjoying what economists call a "virtuous circle": Gains in production efficiency had lowered its costs, allowing it to lower its prices, which raised demand and thus production, yielding still lower costs per unit. Competing against models such as the Ford Taurus 81 and the Peugeot 504, the Renault 18 filled a gap--medium-large autos--in the Renault line and helped the company leap into first place in the first half of 1984, with a third of the domestic market. Other new models were the Coupe Fuego (1982) and the 1.4-liter-engine Renault 11 (1984).

Renault Argentina reached its maximum size in this period. The Santa Isabel plant consisted of five principal areas--mechanics, pressing, assembly, painting, and mounting--occupying 300,000 square meters (about three million square feet) on 237 hectares (585 acres) of land. Three nearby affiliates provided a variety of components, some of them exported abroad. Three others did the same from the city of Buenos Aires, Tandil; Buenos Aires; and Villa Mercedes, San Luis. The seventh produced gearboxes in Los Andes, Chile, a few miles from the Argentine frontier. Some 13 affiliated auto dealers were selling Renault Argentina cars in five provinces. Four insurance companies were associates, as was Asorte, a service company.

Renault Argentina remained the leading automaker in 1985, when it ranked 13th highest in the nation in sales, but it lost money that year. The later part of the decade was even worse. Its finances mismanaged, Argentina was stricken by hyperinflation, and Renault Argentina had difficulty converting the increasingly worthless austral notes of its customers into hard currency. The company lost some $300 million between 1988 and 1991, resulting in a shakeup at the top.

Mixed Results in the 1990s

A new era for Argentine automaking began after Carlos Menem assumed the presidency in 1989. The network of government measures intended to protect the domestic industry came to an end, including a law that required 90 percent of all components to be manufactured within the country. As a result Renault Argentina reduced its high level of vertical integration, selling off most of its subsidiaries, although it retained and even expanded its profitable forging and die-making facilities. Employment fell from 10,000 to 6,000, and the number of models was cut from eight to three.

These cost-cutting measures enabled Renault Argentina to make a healthy profit in 1992, but, since the company had lost nearly $200 million the previous year, the parent firm in Paris had already decided to cut itself loose from Argentina. The beneficiary was an obscure auto parts manufacturer named Manuel Fernando Antelo, who purchased two-thirds of Renault Argentina on remarkably generous terms. According to journalist Luis Majul, Antelo was required to pay parent Renault only if there were profits, and he secured a bank loan for this purpose that accepted the shares he was buying as collateral. Moreover, Paris-based Renault contributed $100 million and took out $75 million in bonds to help the enterprise. Renault Argentina took a new name, that of Compania Interamericana de Automoviles S.A. (Ciadea). According to the terms of the agreement, Antelo was actually buying two-thirds of a new holding company, Compagnie Financiere pour l'Amerique Latine (COFAL), with parent Renault retaining the other third. COFAL held 72.3 percent of Ciadea, with the remainder publicly traded in Buenos Aires.

Antelo cut costs further by reducing the number of managers from 85 to 40 and the number of levels between the top and bottom positions from nine to five. He closed the plant during a dispute with suppliers and also when demand was low. In 1993 and 1994 Ciadea was the most profitable of all Argentine automakers, earning more than $100 million each year. It produced 106,000 units, or 26 percent of the domestic market, in 1994, ranking second to Sevel Argentina S.A., which was assembling Fiat and Peugeot cars. Ciadea was introducing a new model every 18 months, with the most popular ones being the Renault 9, which was the best-selling car in Argentina in 1994. The Renault 12 and 18 were retired that year, with the Renault 19 replacing the latter. Another success was the Trafic, a light truck that became the leader in its category. Also in 1994, Ciadea took a 10 percent interest in GMAC de Argentina S.A., which was engaged in the financing of car loans. A well-tailored man-about-town with a penchant for non-automotive models half his age, Antelo relished his success, was constantly trailed by paparazzi, and opened a pub, Museo Renault, in a mansion located in one of the most elegant neighborhoods of Buenos Aires.

The following year was one of recession. It saw a drop of 35 percent in Argentine autos sold, and Ciadea's production fell by even more, to 64,520, or 25 percent of the total. The company responded by cutting employment by 1,500, to 5,800, reducing its prices by an average of 20 percent, and introducing new models, including the mid-sized Mégane and the subcompact Clio. Ciadea even arranged to pay the interest on auto loans for the first year and a half. These measures kept the company from losing much market share, but its profit fell to only $6 million in 1997. At this point Antelo sold most of his shares back to the parent firm, which restored the Renault Argentina name for its affiliate. Although no longer in charge, he retained the title of chairman of the board.

Downsizing in the New Millennium

Renault Argentina ranked fourth in revenue among automakers in 1997, rose to second in 1998 (with record sales of $1.39 billion), and retained that ranking in 1999 and 2000. But in 2001 it fell to fourth place, and in 2002, to fifth place. The company chose to give priority to its finances and to cut production and staff as the economic downturn in Argentina turned into a crisis culminating in the devaluation of the peso at the end of 2001. That year the parent firm contributed $300 million to assure the survival of its affiliate. Like other companies, Renault Argentina was swamped in red ink, but it received an additional $160 million from parent Renault in January 2003 to allow it to pacify its bank creditors. The company lost another ARS 209.31 million (about $71 million) in 2003 and ended the year with debt of ARS 815.64 million (about $276 million). During the first half of 2004, however, the company made a small profit. Renault Argentina's principal shareholders were COFAL, 61 percent, and Renault Holding AG, 17 percent.

In late 2003 Renault Argentina was operating at only 15 percent of plant capacity--the average for the entire industry--and was turning out only about 100 cars a day. The company had stopped making the Trafic in 2002, was operating just three days a week, and was employing only 950 people. Production came to 15,540 vehicles. Domestic retail sales of Renaults totaled 14,718, or 11 percent of the total. Another 5,435 units were exported. The compact Clio, in a new version, represented about 60 percent of Renault Argentina's sales. The company also introduced new versions of the light truck Master and presented a special edition of the medium-sized Scenic. The rest of the line consisted of the medium-sized Mégane and Laguna and the Kangoo, which appeared as a compact model in 1998, the Express pickup, and a limited-edition Dynamique for young drivers. Renault also became the exclusive distributor of Nissan cars in Argentina after the parent organization bought 37 percent of the Japanese automaker in 2001. A $20 million investment was made for advertising and the development of a network of 26 concessionaires with 43 points of sale. In 2003 Renault sold 1,656 Nissans. The Nissan line in Argentina consisted of the sports utility Pathfinder, X-Terra, and X-Trail, and the pickups PU Frontier 4x2 and 4x4.

By this time Renault Argentina's Santa Isabel plant had grown to about 400,000 square meters. It was divided into several areas, such as stamping and welding, painting, and assembling for manufacturing, industrial logistics, engineering, and quality control for service, and human resources, sales, finance, and commercial for administration. Some 30 industrial robots were in operation. The plant was capable of turning out 640 vehicles per day. More than two million vehicles had been produced since 1956.

History

Producing cars since late 1898, the Renault corporation was founded in 1899 as
Soci辿t辿 Renault Fr竪res by Louis
Renault, his brothers Marcel and Fernand, and his friend Thomas Evert.

The first Renault car, the Renault Voiturette 1CV was sold to a friend of
Louis' father after giving him a test ride in December 24 1898. The client was so impressed
with the way the tiny car ran that he bought it.

The brothers immediately recognized the publicity that could be
gotten for their vehicles by participation in motor racing and Renault
made itself known through achieving instant success in the first
city-to-city races held in France, resulting in rapid expansion for
the company. Although Louis Renault never raced again, his company
remained very involved, including their Renault AK 90CV winning the
first ever Grand Prix motor racing event in 1906. In 1899,
Renault launched the first production sedan car as well as patenting the first turbocharger. As well as
cars, Renault manufactured taxis, buses
and commercial cargo vehicles in the pre-war years, and during
World War I (1914 -
1918) branched out into ammunition, military airplanes and
vehicles such as the revolutionary Renault FT-17 tank.

Inter-war years

Between the two world wars, Louis Renault enlarged the scope of
his company, producing agricultural and industrial machinery.

Post war

During World War
II, Louis Renault's factories worked for Nazi Germany producing
trucks with work on cars officially forbidden. In the years
immediately following its nationalization Renault experienced
something of a resurgence, led by the rear engine 4CV model, which was launched in 1946 and proved itself
a capable rival for cars such as the Morris Minor and Volkswagen Beetle, its
success (more than half a million sold) making sure it remained in
production until 1961. As with earlier Renault models, the company
made extensive use of motor racing to promote the 4CV, the car
winning both the Le
Mans 24 Hours and Mille Miglia races as well as the Monte Carlo
rally.
The 4CV's replacement, the Dauphine, sold extremely well as the company
expanded production and sales further abroad, including Africa and North America. the
Renault 4 and Renault 8 in 1961 and 1962
respectively. Both cars continued Renault's motor racing traditions
with great success in rallying, a tradition which was further upheld by
collaborations with the Alpine company (which most famously produced the
Renault-powered Alpine A110). As well as the 4 and 8, the company
achieved success with the more upmarket Renault 16 launched in 1966,
which continued Renault's reputation for innovation by being the
world's first hatchback larger than subcompact size.

The company's compact and economical Renault 5 model, launched in 1972, was another
success, particularly in the wake of the 1973 energy crisis.
despite the Dauphine's success in the United States in the late
1950s, and an unsuccessful car-assembly project in Saint-Bruno-de-Montarville, Qu辿bec, (1964-1972), Renault
had virtually disappeared from North America by the 1970s.

However, in the early part of the decade, when the energy
crisis-hit continent required smaller, more economical cars,
Renault began to make plans to return through a collaborative
partnership with the American manufacturer American Motors
Corporation (AMC). Previously, AMC's Rambler American was
badged as a Renault
Torino in Argentina (sold through IKA-Renault). From 1962 to
1967, Renault assembled Completely Knocked Down (CKD) kits of the Rambler Classic sedans
in its factory in Belgium. Renault did not have large or luxury
cars in its product line and the "Rambler Renault" was aimed as an
alternative to the Mercedes-Benz "Fintail" cars.

This was one of a series of collaborative ventures undertaken by
Renault in the late 1960s and 1970s, as the company established
subsidiaries in Eastern Europe, most notably Dacia in Romania, and South
America (many of which remain active to the present day) and
forged technological cooperation agreements with Volvo and Peugeot (for instance, for the
development of the PRV V6 engine,
which was used in Renault
30, Peugeot 604,
and Volvo 260
in the late 1970s.). Renault sold some interesting models in the
USA in the 1980s, especially the simple looking but fun Renault Alliance GTA
(Renault 9) and GTA
convertible ? However, Renault sold AMC to Chrysler in
1987 after the
assassination of Renault?s chairman, Georges Besse. However,
Renault products were no longer imported into the United States
after 1989.

.

In the late seventies and early eighties Renault increased its
involvement in motorsport, with novel inventions such as
turbochargers in their Formula One cars. the Renault Espace was one of the first minivans and was to remain the
most well-known minivan in Europe for at least the next two
decades. The second-generation Renault 5, the European Car Of The
Year-winning Renault
9, and the most luxurious Renault yet, the 25 were all released in the
early 1980s, building Renault's reputation, but same time the
company suffered of poor product quality which reflected badly to
the image of the brand and the ill-fated Renault 14 is seen by many as
the culmination of these problems in the early 1980s. Although this
succeeded in halving the deficit by 1986, Besse's treatment of the
workforce resulted in him being assassinated by the left wing terrorist group Action Directe in November 1986. He was replaced
by Raymond L辿vy, who continued along the same lines as Besse,
slimming down the company considerably with the result that by the
end of 1987 the company was more or less financially stable.

A revitalized Renault launched several successful new cars in the
early 1990s, including the phenonemonally successful 5 replacement
the Clio, the
second generation Espace, the innovative Twingo, the Laguna, and the 19. Renault-powered cars won
the Formula One World Championship in 1992, 1993, 1994, 1996 and
1997 with Williams,
and in 1995 with Benetton and 2005 as Renault F1 itself. This new freedom
allowed the company to venture once again into Eastern Europe and
South America,
including a new factory in Brazil and upgrades for the infrastructure in Argentina and Turkey. The Avantime, a bizarre
coup辿/minivan hybrid,
sold very poorly and was quickly discontinued while the luxury
Vel Satis
model did not sell as well as hoped. Louis Schweitzer has
been the Chairman of Renault since 1992 and CEO from 1992 to 2005. In 2005, Carlos Ghosn (also CEO of
Nissan) became Renault's CEO, with Louis Schweitzer staying on as
Chairman.

Renault has a stake of 44.4 per cent in Japanese automaker Nissan together with which they form the Renault-Nissan
Alliance. Renault owns Samsung Motors (Renault Samsung Motors) and Dacia, as well as
retaining a minority (but controlling) stake (20%) in the Volvo Group.

As of 2004, Renault
was the fifth most popular car maker in the United Kingdom behind
the Ford Motor
Company, Vauxhall Motors, Peugeot and Volkswagen. Renault retained its position as the leading
brand in Europe with 1.8 million passenger cars and light
commercial vehicles sold and market share of 10.8%.

Renault is exhibiting a Hi-Flex Clio 1.6 16v at the 2006 Paris
International Agricultural Show. This vehicle, which addresses
the Brazilian market, features Renault-developed Flex Fuel
technology, with a highly versatile engine that can run on fuel
containing petrol and
ethanol in any
proportion (0% to 100% of either)

Renault, together with associated brands Dacia and Renault Samsung,
aims to sell 4 million vehicles worldwide in 2010.

On June 30, 2006 the media reported that General Motors convened
an emergency board meeting to discuss a proposal by shareholder
Kirk Kerkorian to
form an alliance between GM and Renault-Nissan. There is speculation that a GM-Renault-Nissan alliance could pave the way for Renault's
return to the U.S. market, since GM could eliminate some of its less profitable brands,
and offer the owners of dealerships that would otherwise close
Renault dealerships.

Corporate governance

Current members of the board of directors of Renault are:

Yves Audvard

Michel Barbier

Alain Champigneux

Fran巽ois de Combret

Charles de Croisset

Carlos
Ghosn

Jean-Louis Girdolle

Itaru Koeda

Marc Ladreit de Lacharri竪re

Dominique de La Garanderie

Bernard Larraouturou

Henri Martre

Jean-Claude Paye

Fran巽ois
Pinault

Franck Riboud

Louis Schweitzer

Georges Stcherbatcheff

Robert Studer

Timeline

1898 - Louis Renault
founded Renault

1903 - Marcel Renault
dies in a car accident

1943 - The Renault
factory in Billancourt is attacked by the German army

1944 - Louis Renault
dies

1966 - Taking the
idea from the Austin A40 Farina, the first hatchback in the world, the
Renault 16 was
developed.

1978 - The first
turbo powered subcompact, the Renault 5 Turbo is presented.

1979 to 1987, Renault held majority
ownership in the American Motors Corporation (AMC), which it sold
to Chrysler Corporation in March 1987.

1986 - On April 9 the Government of
France ruled against the privatization of Renault.

1992 - Louis
Schweitzer becomes president of Renault group.

1996 - The company
was privatized
to create Renault S.A.

1999 - Renault
purchased a 36.8 percent equity stake in Nissan the troubled Japanese car maker,
injecting $3.5 billion to obtain effective control of the company
under Japanese law. Nissan also owns 15% of Renault in turn

2001 - Renault sold
its industrial vehicle subdivision (Renault V辿hicules
Industriels) to Volvo, which renamed it Renault Trucks in
2002.

Renault's Range is well known for safety. All of the models,
except the Trafic, Clio II, Twingo, and Kangoo (the latter two are
expected to be replaced soon while the Clio II to end its
production in 2008) have
obtained the maximum 5-star safety crash-test rating from EuroNCAP, and became the first
maker to have seven cars with this rating.
Renault Laguna was the first medium-size car to obtain five-star
rating, as well as the Modus in its own category.

Motorsport

Motorsport has long been recognised as an effective marketing tool
for automobile manufacturers. In the late seventies and early
eighties, Renault began to involve itself more heavily in
motorsport, setting up a dedicated motorsport division called
Renault Sport, and
winning the Le Mans 24 Hours (once again in collaboration with
Alpine) while achieving success in both rallying (with the Renault 5 Turbo) and
Formula One.

Renault also took over the Benetton F1 team in 2001, and quickly
became very competitive, Fernando Alonso winning Renault's first race in its
second incarnation at the 2003 Hungarian
Grand Prix. Conversly if the team is unsuccessful in future it
can be expected that Ghosn will withdraw resources from the
sport.

In 2006 Carlos Ghosn finally announced that the team will stay
in F1 in the long term (at least until 2012) putting an end to the
rumors.

Accolades

Renault cars have performed well in the European Car of the
Year awards, being the Clio the only car since the prize's
conception in 1964 to won
twice the award:

1966: Renault 16

1982: Renault 9

1991: Renault Clio

1997: Renault
Sc辿nic

2003: Renault M辿gane
II

2006: Renault Clio
III

The Renault 12
(1970), Renault 5
(1972), Renault 20
(1976), Renault 25
(1985) and Renault
Laguna (2002) have all achieved runners-up in spot in the
competition. Renault has regularly topped the French car sales
charts, fighting off fierce competition from Citro谷n and Peugeot.

Overseas Accolades

In 1970 the Renault 12 won the
prestigious Australian Wheels Car of the Year award.

Typeface

Both the Renault logo and its documentation (technical as well
as commercial) had used a specially designed typeface called Renault,
developed by British firm Wolff Olins. This type family is said to have been
designed not for prestige reasons, but mainly to save costs at a
time where the use of typefaces was more costly than it is
now.

In 2004, French typeface designer Jean-Fran巽ois Porchez was commissioned to design a
replacement.

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